Product liability lawsuits in the food and supplement industry have traditionally arisen in the personal injury context, where the plaintiff generally alleges that the ingestion of the product caused his or her injury. There is a new type of products case on the rise, however, that does not focus solely on personal injury. Instead, plaintiffs’ focus is on alleged misrepresentations made in food and supplement labeling. These lawsuits, often brought under state consumer protection laws prohibiting deceptive conduct, seem to be increasingly attractive to plaintiffs’ counsel because such claims eliminate the requirement to prove causation, thus greatly simplifying the case from plaintiffs’ perspective. Additionally, some state laws do not even require that plaintiffs prove reliance on the allegedly misbranded label, making class action certification significantly less cumbersome.

As plaintiffs begin to increasingly bring these class action lawsuits – which can sometimes result in sizable settlements – food and supplement companies need to become aware of the types of claims brought, their potential defenses and steps that can be taken to avoid these lawsuits. This article provides a broad overview of the types of claims brought in these consumer class action cases, as well as options for responding to such lawsuits.

The Federal Food, Drug, and Cosmetic Act of 1938 (“FDCA”) prohibits the sale or distribution of misbranded foods. Under Section 343(a), a food is misbranded if “its labeling is false or misleading in any particular.” The term “misbranded” under the FDCA operates as the functional equivalent of “deceptive” under state laws. Traditionally, mass torts have not qualified for class action treatment due to the individual issues surrounding the particular injury and causation of the injury. Claims based on allegedly deceptive labeling, however, may at least arguably be more amenable to class certification, especially if proof of plaintiffs’ reliance on the label is not a required element. Obtaining class certification facilitates plaintiffs’ counsel’s road to negotiating settlements with potentially significant legal fees awarded to class counsel. And defendants face the threat of significant potential liability exposure in statewide class actions.[2]

Claims Targeted

“All Natural” and “Healthful” Claims

Among the consumer class action claims that plaintiffs bring alleging deceptive labeling, some of the most common involve claims that a food is deceptively labeled as “all natural,” “nutritious,” or “healthful.” American consumers have been increasingly purchasing products that claim to have “all natural” ingredients. Although the FDA has not specifically defined what foods qualify as “natural,” a 1993 regulation states that use of the term “natural” on a food label is not misleading when “nothing artificial or synthetic . . . has been included in, or has been added to, a food that would not normally be expected to be in the food.”[3] Warning letters have also shed some light on what the FDA considers “natural.” For example, in November 2011, the FDA issued a warning letter to Alexia Foods, over its “all natural” claim on a Roasted Red Potatoes & Baby Portabella Mushrooms product, which contained the synthetic chemical preservative disodium dihydrogen pyrophosphate.[4] The synthetic chemical preservative was an additive that the FDA said “would not normally be expected to be in the food.”[5]

Lawsuits challenging “all natural” claims frequently involve products containing high fructose corn syrup, alkalized cocoa and factory-made ascorbic acid. For example, plaintiffs sued Snapple Beverage Company because its products labeled “all natural” contained high fructose corn syrup.[6] Class certification was ultimately defeated in that case because the plaintiffs could not establish a methodology to prove causation and injury.[7] Similarly, consumers have brought claims against Frito Lay for its “all natural” claims on products containing genetically modified corn or vegetable oil, such as Tostitos and Sun Chips.[8]

Plaintiffs also frequently challenge products claiming to be “healthful” when they contain ingredients such as trans fat, high sugar content, high sodium content and/or artificial colors. In a prime example of such a case, Lam v. General Mills, Inc., plaintiffs challenged the healthful claims made by General Mills on its Fruit Roll-Up snacks. No. 11-05056 (N.D. Cal.). The complaint alleged that, while these snacks were presented as healthful by the company, they in fact contained “trans fat, added sugars and artificial food dyes; lacked significant amounts of real, natural fruit; and had no dietary fiber.”[9] While the Northern District of California dismissed certain claims – including those challenging use of the terms “fruit flavored” or “naturally flavored” – as preempted, the court did allow the lawsuit to go forward with respect to the plaintiffs’ claim that the statement “made with real fruit” was misleading.[10]

Another example of this type of claim is the class action lawsuit, settled by Ferrero in January 2011, where plaintiffs claimed that Nutella was falsely advertised under the New Jersey Consumer Fraud Act as a nutritious, wholesome food, despite having high saturated fat and sugar content.[11]

Other Labeling Claims

In addition to claims falling under the “natural” or “healthful” category, class action suits have been brought alleging other types of misrepresentations found on food and supplement labels. For example, in Williams v. Gerber Products Co., 552 F.3d 934 (2008), the plaintiffs argued that the packaging of Gerber’s Fruit Juice Snacks displayed a variety of fruits, but that in reality the only fruit in the snack was white grape juice, and the two most prominent ingredients were corn syrup and sugar. The lower court dismissed the claims because the ingredients were disclosed on the back panel, but the Ninth Circuit reinstated the claims. The plaintiffs in the class action Fishbein v. All Market Inc., No. 11-civ-5580 (S.D.N.Y.), claimed that All Market, Inc.’s VitaCoco coconut water does not contain the amount of electrolytes (sodium, magnesium, potassium) stated on the label, and that it does not hydrate more effectively than less expensive sports drinks despite being labeled “super hydrating.” The parties have reached a settlement[12] and have a final settlement approval hearing scheduled for August 22, 2012.

Preemption Defense to Class Action Claims

Defendants faced with lawsuits challenging substantiation of their labeling claims have recently been asserting federal preemption as a defense, with some success. The Nutrition Labeling and Education Act of 1990 (“NLEA”), an amendment to the FDCA, prohibits states from imposing “any requirement respecting any claim of the type described by Section 343(r)(1) made in the label or labeling of food that is not identical to the requirement of Section 343(r).”[13] In Turek v. General Mills, 662 F.3d 423 (7th Cir. 2011), the plaintiffs’ claims were dismissed as preempted by NLEA. The plaintiffs claimed that the defendants’ labeling for their “chewy bars” should have disclosed that the bars contained inulin (which the plaintiffs characterized as a “non-natural” fiber) and did not contain “all natural” fiber, or that the inulin fiber did not provide that same level of health benefits as natural fiber.[14] Judge Posner writing for the court held that these claims were preempted because the only statutory requirement in Section 343(q)(1) is that the labeling state “the amount of . . . dietary fiber . . . contained in each serving size or other unit of measure.”[15] The disclaimers that the plaintiffs argued should be added to the packaging for the inulin-containing bars were not identical to the labeling requirements imposed by NLEA for labeling that mentions dietary fiber; “even if the disclaimers…would be consistent with” the requirements imposed by NLEA, “consistency is not the test, identity is.”[16] Thus, the plaintiffs’ claims were dismissed as preempted.[17] Similarly, in Lam v. General Mills, Inc. (supra, n. 11), certain of the plaintiffs’ claims were dismissed as preempted.

As the body of preemption case law concerning food labeling continues to grow, it remains to be seen what state law claims can survive a federal preemption defense.

California

California is a major player in this growing trend. For the reasons discussed below, a great number of recent consumer labeling class actions have been brought in California.

Consumer Protection Laws

Currently, many plaintiffs seek recovery under California’s state consumer protection laws, including the California False Advertising Law (“FAL”), Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”), recognized by some as arguably some of the broadest consumer protection laws in the country. Two recent California Supreme Court decisions have further encouraged these lawsuits by relaxing the requirements for standing under the California UCL. The Court in In re Tobacco II Litigation, 46 Cal. 4th 298 (2009) held that only the class representative needed to establish standing, not all of the absent class members. Additionally, in Kwikset Corp. v. Superior Ct. of Orange County, 51 Cal. 4th 310 (2011), the court held that if the plaintiff purchased a product because of a deceptive label, that would be enough to establish “injury in fact” for purposes of standing. In that case, the plaintiff had purchased door locks, which were not in any way defective, but were labeled “Made in the USA” even though some components were made elsewhere.

Proposition 65

California has also become a hotbed for consumer class action suits as a result of the state regulation known as “Proposition 65.” Formally titled “The Safe Drinking Water and Toxic Enforcement Act of 1986,” Proposition 65 requires businesses to notify Californians about the presence of certain chemicals in the products they purchase, in their homes or workplaces, or that are released into the environment. California publishes a list of chemicals that are “known to the State of California” to cause cancer, birth defects or other reproductive harm.[18] The list contains a wide range of naturally occurring and synthetic chemicals. Businesses are required to provide a “clear and reasonable” warning before knowingly and intentionally exposing anyone to a listed chemical. By law, a warning must be given for listed chemicals unless exposure is low enough, according to the regulations, to pose no significant risk of cancer, or is significantly below levels observed to cause birth defects or other reproductive harm. For chemicals that are listed as causing cancer, the “no significant risk level” (“NSRL”) is defined as the level of exposure that would result in not more than one excess case of cancer in 100,000 individuals exposed to the chemical over a 70-year lifetime. In other words, a person exposed to the chemical at the “no significant risk level” for 70 years would not have more than a “one in 100,000” chance of developing cancer as a result of that exposure. For chemicals that are listed as causing birth defects or reproductive harm, the “no observable effect level” is determined by identifying the level of exposure that has been shown to not pose any harm to humans or laboratory animals. Proposition 65 then requires this “no observable effect level” to be divided by 1,000 in order to provide an ample margin of safety (“MADL”). Businesses subject to Proposition 65 are required to provide a warning if they cause exposures to chemicals listed as causing birth defects or reproductive harm that exceed 1/1,000th of the “no observable effect level.” Proposition 65 has unfortunately become a bounty-hunter statute and has been widely used by plaintiffs’ counsel to seek recovery. Dietary supplements, in particular, have been the target of a number of recent actions brought asserting Proposition 65 claims.

Responding to Proposition 65 Claims

Defendants may choose to settle these claims rather than risk facing a potentially adverse judgment. These settlements may include monetary fees along with either product reformulation plans or agreements to provide warnings to consumers. These warnings must be made in connection with the sale of each of the products at issue, stating that the product contains a chemical known to the State of California to cause cancer, birth defects or other reproductive harm. Some defendants, however, choose not to settle. Such defendants may argue, for example, that that the testing conducted was incorrect. They may also argue that the chemical in the product was “naturally occurring” based on scientific data and ingredient history, as there have been exceptions for chemicals that are naturally occurring in the product.[19]

Conclusion

Given the rise in consumer class actions involving foods and dietary supplements, it is likely that these claims will continue to be brought for at least the foreseeable future. To help avoid litigation, companies should be mindful of both ingredients and labeling claims, and should consult counsel regarding proactive re-labeling of products where it may be warranted. When lawsuits do arise, companies will need to consult with counsel and carefully consider potential defenses and settlement options.

[1] Ms. Gray, Mr. Oetheimer and Ms. Tulla-Isidro would like to thank Mary Reynolds, associate at Goodwin Procter LLP, New York, NY, for her assistance with this article.

[2] There is also the potential for nationwide class actions, although differences in state law can be used to oppose such lawsuits.

Goodwin Procter LLP is a limited liability partnership which operates in the United States and has a principal law office located at 53 State Street, Boston, MA 02109. Goodwin Procter (UK) LLP is a separate limited liability partnership registered in England and Wales with registered number OC362294. Its registered office is at Tower 42, 25 Old Broad Street, London EC2N 1HQ. A list of the names of the members of Goodwin Procter (UK) LLP is available for inspection at the registered office. Goodwin Procter (UK) LLP is authorized and regulated by the Solicitors Regulation Authority.